Trump promises tax cuts as Senate GOP paves way with budget

Photo: AP. Pat Toomey

October 20, 2017 01:24 PM

WASHINGTON (AP) — President Donald Trump promised tax cuts Friday "which will be the biggest in the history of our country!" following Senate passage of a $4 trillion budget that lays the groundwork for Republicans' promised tax legislation.

Republicans hope to push the first tax overhaul in three decades through Congress by year's end, an ambitious goal that would fulfill multiple campaign promises but could run aground over any number of disputes. Failure could cost the GOP dearly in next year's midterm elections.

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The budget plan, which passed on a near party-line vote late Thursday, includes rules that will allow Republicans to get tax legislation through the Senate without Democratic votes and without fear of a Democratic filibuster. Nonetheless, the GOP's narrow 52-48 majority in the Senate will be difficult for leadership to navigate, as illustrated by the Republicans' multiple failures to pass legislation repealing and replacing "Obamacare."

The final vote on the budget was 51-49 with deficit hawk Sen. Rand Paul of Kentucky the lone opposing GOP vote.

Trump insisted over Twitter on Friday that Paul would be with him in the end on taxes, even though the senator has been critical of the tax package as it's emerged thus far.

Trump wrote, "The Budget passed late last night, 51 to 49. We got ZERO Democrat votes with only Rand Paul (he will vote for Tax Cuts) voting against........This now allows for the passage of large scale Tax Cuts (and Reform), which will be the biggest in the history of our country!"

It remains to be seen whether the overhaul will add up to the biggest tax cuts ever. Trump and Republicans have only produced a nine-page framework, leaving plenty of blanks that Congress needs to fill in over the coming months on income-tax brackets and elimination of some favored deductions.

House Speaker Paul Ryan, R-Wis., said Friday the GOP will add a fourth tax bracket for high-income people to the three originally proposed, but Ryan didn't say what the tax rate would be for that bracket. Speaking on "CBS This Morning," Ryan said Republicans are working on the tax rate for "the fourth bracket that the president and others are talking about that we're going to do."

The House has passed a different budget, but House Republicans signaled they would simply accept the Senate plan to avoid any potential of delaying the tax measure.

"I look forward to swift passage and to working with the president on tax reform," House Budget Committee Chairman Diane Black, R-Tenn., said Friday.

Republicans are looking for accomplishments following an embarrassing drought of legislative achievements despite controlling both chambers of Congress and the White House. Republican lawmakers publicly admit that failure on taxes would be politically devastating with control of the House and Senate at stake in next year's midterm elections.

"It would be a complete disaster," Sen. Lindsey Graham, R-S.C., said after the final budget vote.

But Republicans are split on taxes. A restive rump of House Republicans from high-tax states like New York, New Jersey, Illinois and California staunchly oppose the tax plan's proposed elimination of the federal deduction for state and local taxes. They maintain it would hurt low- to mid-income taxpayers and subject them to being taxed twice.

Their vocal opposition has led Republican leaders in Congress like Ryan and Rep. Kevin Brady, R-Texas, who heads the tax-writing Ways and Means Committee, to hear out the fractious GOP members and seek a compromise with them.

At the same time, the White House is making overtures to conservative Democrats in the House and Democratic senators from states that Trump won in the 2016 election. Most heavily courted have been Sens. Claire McCaskill of Missouri, Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota. The trio dined this week at the home of daughter Ivanka Trump and her husband, Jared Kushner, both top advisers to Trump.

But Manchin said after Thursday's vote, "I fear that passage of this budget today will make it difficult to pass bipartisan tax reform in the coming weeks." In his conversations with Trump, Manchin said, "we have discussed our shared goal of ensuring any tax-reform package passes with both Republican and Democratic votes, and focuses on providing tax relief for working Americans. The current tax-reform proposal ... does not reflect my conversations with the president."

The Democrats were excluded from the drafting of the tax blueprint, and they continue to demand that any tax-cutting plan not add to the mounting $20 trillion national debt. The newly adopted Senate budget plan provides for $1.5 trillion over 10 years in debt-financed tax cuts, busting earlier Republican pledges of strict fiscal discipline.

The money would be used for the tax plan's cut in the corporate tax rate from 36 percent to 20 percent, reduced taxes for most individuals, and the repeal of inheritance taxes on multimillion-dollar estates. The standard deduction would be doubled, to $12,000 for individuals and $24,000 for families, the number of tax brackets would shrink from seven, and the child tax credit would be increased.

Trump and the Republicans pitch the plan as a boon to the middle class and a spark to economic growth and jobs. Democrats charge it mainly would benefit wealthy individuals — like Trump — and big corporations.